Correlation Between Sellas Life and Biocardia

Can any of the company-specific risk be diversified away by investing in both Sellas Life and Biocardia at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sellas Life and Biocardia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sellas Life Sciences and Biocardia, you can compare the effects of market volatilities on Sellas Life and Biocardia and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sellas Life with a short position of Biocardia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sellas Life and Biocardia.

Diversification Opportunities for Sellas Life and Biocardia

0.44

Correlation Coefficient

Sellas Life  Biocardia

Very weak diversification

The 3 months correlation between Sellas and Biocardia is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sellas Life Sciences and Biocardia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biocardia and Sellas Life is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sellas Life Sciences are associated (or correlated) with Biocardia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biocardia has no effect on the direction of Sellas Life i.e., Sellas Life and Biocardia go up and down completely randomly.

Pair Corralation between Sellas Life and Biocardia

Considering the 90-day investment horizon Sellas Life Sciences is expected to generate 0.57 times more return on investment than Biocardia. However, Sellas Life Sciences is 1.77 times less risky than Biocardia. It trades about 0.0 of its potential returns per unit of risk. Biocardia is currently generating about -0.02 per unit of risk. If you would invest  255.00  in Sellas Life Sciences on September 21, 2024 and sell it today you would lose (165.00) from holding Sellas Life Sciences or give up 64.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Sellas Life Sciences  vs.  Biocardia

Sellas Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sellas Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Biocardia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biocardia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sellas Life and Biocardia

The main advantage of trading using opposite Sellas Life and Biocardia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sellas Life position performs unexpectedly, Biocardia can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Biocardia will offset losses from the drop in Biocardia's long position.

The idea behind Sellas Life Sciences and Biocardia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.